The SEC vs Ripple case alleged that Ripple sold unregistered securities in the form of its XRP token. Judge Torres concurred with the SEC that Ripple had violated securities law when it sold XRP to institutional investors, privately. So, why did Gary Gensler and the SEC abandon criminal indictments – WITH PREJUDICE? Are the 'players' structuring a sweetheart deal for Ripple? Was there a sidebar to induce the SEC and Judge Torres to gratuitously surrender to Ripple?
Part 5 Of An 8 Part Exposé
How Ripple surreptitiously changed the fundamental nature of XRP after investors had already committed funds. Contrary to popular belief market forces DO NOT play a significant role in the price of XRP. Ripple, almost exclusively, shapes the price of XRP.
Brad Garlinghouse and David Schwartz have artfully dodged disclosing critical information about its liquidity sourcing practices, control over XRP supply and so much more.
Ripple and it’s influence-rs repeatedly make the deceitful claim that there is now clarity that XRP is not a security. The deceit is by omission and deflection. Brad Garlinghouse, David Schwartz and their lackey influence-rs resolutely fail to mention that the Judge had CLEARLY ruled that XRP WAS A SECURITY when sold to institutional investors.
While AMM is a common mechanism used by exchanges, Ripple’s integration of AMM with its large reserves of XRP via its ODL service creates a unique scenario for market manipulation. Unlike typical exchanges that rely on user-provided liquidity, Ripple can directly inject liquidity from its own reserves. The ability to control liquidity is a form of market manipulation.
Part 5: Judicial Bias? There is Something Seriously Amiss in the NY Judicial System.
Judge Torres concurred with the SEC that Ripple had violated securities law when it sold XRP to institutional investors, privately. So, why did Gary Gensler and the SEC abandon criminal indictments, WITH PREJUDICE? Why did Judge Torres readily sanction the capitulation? Was there a sidebar to induce the SEC and Judge Torres to gratuitously surrender to Ripple?
Coming Soon
Part 6: The Mystery of Institutional Silence.
Why haven’t institutional investors filed claims against Ripple for selling them unregistered securities? Because Ripple and institutional investors are “the whales” secretly transferring large amounts of XRP as part of settlement agreements “off the exchanges”; in full view of, and possibly, with a silent nod from Gary Gensler and Judge Analisa Torres.
Part 7: Ripple's IPO and ETF Mirage: The Truth Behind the Hype.
Ripple's strategy hinges on keeping retail investors invested in the potential of XRP. The deceitful idea of a forthcoming IPO or an ETF approval serves as a powerful motivator for these investors, many of whom are already deeply invested and hopeful for significant returns; which Ripple knows will elude them and is actively making sure it does not happen.
Part 8: The Imminent Collapse of XRP and Implosion of Ripple Inc.
Retail investors have been the backbone of XRP's price stability, largely due to the speculative hype around potential wide scale adoption and IPO and ETF approvals. Once this illusion is shattered, the crash of XRP and the catastrophic effect it will have on the crypto market and the crypto industry as a whole, will pale in comparison to the FTX debacle. Sam Bankman-Fried can perhaps look forward to at least 3 members of the fraternity to share his lodgings with.
Part 5
The SEC, Gary, & Torres Are In Lockstep.
The SEC vs Ripple case alleged that Ripple sold unregistered securities in the form of its XRP token. The SEC had also, correctly, brought criminal charges against Brad Garlinghouse and Chris Larsen for aiding and abetting in the sale of unregistered securities. Judge Torres concurred; and ruled that Ripple had violated securities law when it sold XRP to institutional investors, privately.
Somehow, it was at that point that everything was turned on it’s head for no apparent reason. The legal maneuvers and rulings surrounding the case, the constant, unrelenting hyperbole that Ripple has unleashed via it’s so-called “XRP Army” and the stage crafted rancor between Brad Garlinghouse and Gary Gensler, could easily be a lesson in the art of deploying smoke and mirrors. Are Gary Gensler and Judge Torres structuring a sweetheart deal for Ripple? Consider how strangely the case has proceeded.
1. The SEC requested that they be allowed to appeal the decision. Okay, granted that this was a request for an interlocutory appeal and that interlocutory appeals are only granted in exceptional circumstances. It seems that the significant harm that her decision can cause to retail investors wasn’t particularly important to Judge Analisa Torres and it did not require an expeditious resolution. After all, who cares about the low-lifers and plebs right?
2. Gary Gensler and the SEC then promptly dropped the criminal charges against the 2 Ripple executives – AND, here’s the clincher – WITH PREJUDICE. Which means that the SEC cannot bring future charges for aiding and abetting in the sale of unregistered securities even if the evidence adduced at a future trial shows that they did!
3. Judge Torres sanctioned the dropping of criminal charges without a peep, despite her own findings that Ripple violated U.S. securities laws. It seems that there is a pattern of sweetheart deals for members of the elite corporate and politically connected clubs. The nepotism shown to Ripple's executives has led to suspicions about the impartiality of the judiciary in this case.
4. The SEC has now filed a proposed settlement, demanding $2 billion. Ripple has responded with an offer of $10 million. All parties concerned, including independent observers, are expecting Judge Torres to deliver a ruling for settlement somewhere in the region of $100 million. Imagine that! In other words, the SEC and, possibly the Judge, are sending a clear message to the crypto industry - “hey fellas, we are ready to play ball”!
How Judge Analisa Torres is Quarterbacking the SEC vs Ripple Game.
It seems that what remains of the SEC case is only the quantum of damages that the Judge may impose, which could range from $10 million proposed by Ripple, to $2 billion demanded by the SEC.
One key area of interest is Ripple's potential actions following a significant fine imposed by Judge Analisa Torres. Remember, this case has turned into a game of thrones. The players are now scheming to leverage the implications of an interlocutory appeal, avoiding trial proceedings and perverted judicial rulings to provide Ripple and it’s executives a “get out of jail free card”, whilst preserving a veneer of propriety and justice.
If Judge Torres imposes a high fine on Ripple, the company can request an interlocutory appeal specifically on the quantum of the fine. Judge Torres would need to decide whether to grant this limited appeal. Interlocutory appeals are generally granted in exceptional circumstances where immediate resolution is necessary to prevent significant harm or injustice. Given that Judge Torres dismissed all concerns of exceptional circumstances to retail investors that her ruling caused, to warrant an appeal, it will be interesting to see how she rules on any appeal on the quantum of damages.
If Judge Torres declines Ripple’s request for an interlocutory appeal on the quantum of the fine, the case might proceed to a full trial, where all aspects of the case, including the fine and any other penalties, could be revisited. To Ripple, this would be akin to a death sentence. If the case proceeds to trial, the status of previous interlocutory rulings and dropped criminal charges would be crucial:
Interlocutory Rulings: These rulings typically remain in effect unless specifically overturned by the trial judge. The SEC could attempt to challenge these rulings during the trial, but they are not automatically voided.
Dropped Criminal Charges: The criminal charges against Ripple executives Brad Garlinghouse and Chris Larsen were dropped with prejudice, meaning they cannot be refiled. This decision stands regardless of the trial’s outcome on the civil aspects of the case. The SEC’s decision to drop criminal charges against Ripple’s executives with prejudice has significant ramifications:
Immunity from Future Charges: Garlinghouse and Larsen are shielded from future criminal charges related to this specific issue, even if new evidence emerges during the civil trial.
Strategic Advantage for Ripple: This decision limits the SEC’s leverage, potentially allowing Ripple to navigate the civil case without the looming threat of criminal repercussions for its top executives.
Ripple Will Pay The Fine – Whatever the Quantum!
The mixed rulings and the dropping of criminal charges despite findings of wrongdoing justifiably raises serious questions about the integrity of the regulatory and judicial processes.
Judge Torres is left with the task of deciding what would be a reasonable quantum of damages. The reality is, Ripple will pay whatever the quantum of damages is handed down by the Judge. But, for the sake of optics, they will throw a tantrum and make a request to appeal the quantum and unleash their army of influencers to denounce the SEC and Gary Gensler. The Judge will, in all likelihood deny the request (as planned) and Ripple will pay the fine or a smaller one that is negotiated with the SEC. The SEC will justify the smaller negotiated fine with the usual excuses of wanting to bring clarity to the industry and to avoid the complexity and cost of a lengthy trial. Judge Torres will, on cue, sanction the smaller, negotiated fine. End of case.
The alternative is that Ripple can choose to go to trial. Why should they?
The persuasive logic that arises from the inconsistent developments in the case suggest that Gary Gensler and Judge Torres have ingeniously positioned Ripple in a strategically advantageous position. With criminal charges dropped, Ripple’s executives are free from personal legal jeopardy. Now, all Ripple has to do is pay the fine. It can then continue its market activities, including potentially manipulative practices, under the guise of providing liquidity and market stability. By paying a substantial fine, Ripple can project an image of compliance and legitimacy while avoiding deeper scrutiny of its operations. This can be used to provide investors and partners with a false sense of security, despite ongoing concerns about transparency and market manipulation.
In short, it appears that Gary Gensler and Judge Torres have provided Ripple and it’s executives a private jet to freedom and switched the runway lights on for a smooth and safe landing. Eat you heart out, Sam Bankman-Fried.
The SEC, Gary Gensler and Judge Torres Have Overplayed the Game.
This case and the subsequent legal maneuvers highlight significant issues in how cryptocurrency regulation is being approached. The decision to avoid criminal charges against Ripple's executives, despite clear findings of securities law violations, raises questions about the priorities, effectiveness and the integrity of the SEC and the judiciary. The SEC's approach in the Ripple case could set a precedent for how other cryptocurrency-related cases are handled. If the regulatory body is seen as lenient or selective in its enforcement actions, it will affect overall market confidence and the behavior of other entities in the space.
These conceivable war games reflect a regulatory and judicial system that is biased and potentially compromised. The SEC’s focus on civil penalties, while significant, does not fully address the need for transparency and accountability that is crucial for maintaining market integrity and investor confidence. Perhaps it was never the SEC’s intention to police the crypto industry for the benefit of all investors.
Comments